USA and the EU, with different pitch – The New Spain

USA and the EU, with different pitch – The New Spain

Washington

Europe is looking at ways of economic growth while the United States focuses cookbooks exit door of monetary stimulus that has been applied since 2007 The meeting central bankers in Jackson Hole (Wyoming) left last Friday to see how the two economic giants of the West are in very different times when the seventh anniversary since the outbreak of the international financial crisis and paved the way for the so-called Great Recession. As several have also been the paths they have followed and over the years power: USA, without fuss to put the machine to manufacture airplane to operate and stimulate growth via monetary; the Europe of the euro, with poultices reforms and austerity to contain the sovereign debt crisis and alleviate the imbalances in their economies and the gaps in its institutional architecture.

In Jackson Hole, the central bankers of the EU and the USA launched with divergent discourses therefore approaches are summarized in the following points.

Drahgi. The president of the European Central Bank (ECB), Mario Draghi, said he was “confident” that the monetary stimulus measures announced in June (new liquidity injections to stimulate credit) “offered a planned boost to demand” and stressed that the institution is “ready” for additional measures.

In June, the ECB cut interest rates to record low of 0.15% and announced other measures. Draghi stressed that in the current context of “weak recovery” in the monetary union, “the risks of doing too little to do too much exceed” on monetary policy, commenting on the high level of unemployment in the euro zone, which is 11.5% (24.75% in Spain). Draghi positively evaluated further movements in the exchange rate in recent months where the euro has depreciated against other currencies like the dollar, which will help stimulate demand and raise inflation.

Yellen. Markets were awaiting Jackson Hole if the president of the Federal Reserve USA made some new revelation about the timing of withdrawal of monetary stimulus, particularly the possibility that the Fed undertake a rise in interest rates (are between 0% and 0.25% since 2008) to improve the American economy and, in particular reducing unemployment, which in the last year has dropped from 7.3% to 6.2%, as is typical central bankers, Yellen was not explicit on the matter: “The economy has made considerable progress in the recovery of the largest and most sustained job loss since the Great Depression,” he said, but nuanced then that “five years later the end of the recession, the labor market has yet to recover fully. ” Manifestations of Janet Yellen were interpreted as confirmation that the Fed is actually US weighing raise rates, but not immediately. Maybe not before 2015.